Fundamentals of Asset Management - US EPA · What is the importance of remaining useful life? ......

Fundamentals of Asset Management

Step 3. Determine Residual Life

A Hands-On Approach

Fundamentals of Asset Management 2

Tom’s bad day…


First of 5 core questions, continued

1. What is the condition of my assets? How well do they

perform?

What is the importance of remaining useful life?

How might we determine remaining useful life?


Expected Life

Tables;

Decay Curves

AM plan 10-step process

1. What is the current state of my assets?

Develop

Asset

Registry

Assess

Performance,

Failure Modes

Determine

Residual

Life

Determine

Life Cycle &

Replacement

Costs

Set Target

Levels of

Service (LOS)

Determine

Business Risk

(“Criticality”)

Optimize

O&M

Investment

Optimize

Capital

Investment

Determine

Funding

Strategy

Build AM

Plan


Determining Residual Life

Time (years)

Serviceable

Unserviceable

Current Condition

Now

Threshold Value

Remaining Service Life

Pe

rfo

rma

nce

But – when has an asset ―failed‖?

When it cannot do what it is required to do

Technical perspective – when the asset is not

―available‖:

• When the asset stops functioning or does not function when

called on

• When performance deteriorates to point of insufficient service

• When it is taken out of service (maintenance, renewal)

Does your maintenance management business

process (think work order) identify when an asset goes

out of service and when service is restored?

Thought exercise: when exactly has a sewer pipe

―failed‖?


7

What do we mean by ―remaining asset life‖?

End of financial life – when an asset is fully financially

depreciated on the ―books‖

End of physical life – when an asset is physically non-

functioning (e.g., failed, collapsed, stopped working)

End of service level/capacitylife – when an asset can

no longer do what we/our customers/stakeholders

require it to do

End of economic life – when an asset ceases to be the

lowest cost alternative to satisfy a specified level of

performance or service level

X



The role of failure modes in determining residual life

Yes

Yes

Yes

No

No

No

No

Yes

Yes

Yes

Yes

Yes

Capacity

LOS

Mortality

Efficiency

Start

Redo—it has

to fail

somehow

Failure Mode Decision Issues Remaining

Life

10 years

3 years

18 months

Now

Is capacity

an issue?

Likely before

other modes?

Likely before

other modes?

Likely before

other modes?

Likely before

other modes?

Has LOS

changed

from design?

Is physical

reliability

an issue?

Is cost

to operate

an issue?

9

Key definition: ―effective asset life‖

―Effective asset life‖ is the lowest expected life for a

selected asset given its operating environment where

that life is derived from a determination of the most

imminent trigger among the three asset life triggers

(service level life, capacity life, physical life, economic

life).

Example (remaining life):

• service level/capacitylife – 3 breaks, estimated 2 years to next

break (―no more than 4 breaks in 5 years‖)

• Physical life – 30 years

• Economic life – 10 years



Determining remaining physical life

Approach 1 Effective life table

Approach 2 Effective life table, plus modification

factors

Approach 3 Direct observation table

Approach 4 Condition and decay curve table

Age Based

Condition Based


Approach 1, effective life table (―design life‖)

Class Asset Type

Effective

Life Class Asset Type

Effective

Life

1 Civil 75 6 Motors 35

2 Pressure pipework 60 7 Electrical 30

3 Sewers 100 8 Controls 25

4 Pumps 40 9 Building assets 30

5 Valves 30 10 Land NA

Sources: manufacturers, industrial associations, GASB, colleagues, consulting engineers,

research (professional associations, universities), international community


Decay or failure curve

100

So, how do we move forward - review:

―Percent of effective life consumed‖

concept

Percent of Effective Life Consumed

Perform

ance

Physical Failure

50

Poor

Excellent

0 25 75

Data distribution of asset condition

Minimum

Cluster


Example: simple determination of ―% remaining

physical life‖

1. Calculate physical life consumed

2. Determine % remaining physical life

% physical life consumed

Life to date

Estimated useful life =

% remaining physical life

= 1.0 – % physical life consumed

20% remaining physical life

= 1.0 – (20 yr. LTD / 25 yr. EUL)

Example calculation - % remaining physical life

Asset acquired 1992; current year 2012; useful life 25 years


Approach 2, amending standard effective lives

From impacts that reduce life

From impacts that increase life

Increasing Time

Decreasing

Design life*

Asset Design Life

Enhanced Effective Life

Diminished Effective Life

*Asset design life is from average effective life tables


Modification factors for effective life tables

Condition Variables

Impact Rating Factor

1 2 3 4 5

Design standards +10% +5% 0 -5% -10%

Construction quality +10% +5% 0 -5% -10%

Material quality +10% +5% 0 -5% -10%

Operational history +10% +5% 0 -5% -10%

Operating environment +10% +5% 0 -5% -10%

External stresses +10% +5% 0 -5% -10%


Approach 3: ―Direct observation‖ table

Assessment (Likelihood of

Occurrence within One Year Description

Almost certain Expected to occur within 1 year

Very high Likely to occur within 1 year

High Estimated 50% chance of occurring within

any year

Quite likely Expected to occur within 5 years; estimated

20% chance of occurring in any year

Moderate

Expected to occur within 10 years;

estimated 10% chance of occurring in any

year

Low Expected to occur within 50 years

Very low Expected to occur within 100 years


Challenge: Age versus condition based renewal

Courtesy of Manatee County

Tod Phinney, P.E.

John Paterson, Ph.D., P.E., BCEE

Same Age!


Strategy: Condition based rather than age based

Assess condition of targeted cast iron and ductile iron

force mains using sonar technology

Conduct failure analysis to understand failure modes

Focus only on assessment of those (short) sections of

force main that are likely in worst condition (high

points where pipes rise)

Use work orders and GIS to locate candidate sections

Assess condition in one day or less


In the trenches… Courtesy of Manatee County

Tod Phinney, P.E.



Results: Manatee County, Florida

Condition assessments were programmed for 14 force

mains that were already programmed for replacement

(combined total length – 12 miles)

Immediate replacement was not required for 90% (by

length); stately alternatively – 90% of pipe scheduled

for replacement based on age had useful service life

left.

Reduced CIP by $5.5 million

Delayed an additional $2 million pending condition

assessment in lieu of replacement

Courtesy of Manatee County

Tod Phinney, P.E.



Approach 4, Condition assessment and the

decay curve

Condition assessment assists in

recognizing…

Nature and shape of the

failure or decay (or

deterioration) curve

Where on the curve is asset’s

current condition

Asset’s remaining useful life,

an estimate


Developing a decay curve

Longitudinal study—uses

data collected over the life of

a single asset (or set of

assets)

Latitudinal study—uses data

collected from multiple assets

of the same type but of

different ages



100

Challenge: tying condition score and %

physical life consumed

Relating asset condition to percent of physical life consumed


Perform

ance

Physical Failure

50

Data distribution of asset condition Poor

Excellent

0 25 75

Minimum

Condition

1

10

3

7

5

9


Alternative: tying condition score to asset failure


100


Perform

ance

Physical Failure

60

Data distribution of asset condition Poor

Excellent

0 20 80

Condition 2

6

Minimum

10

8

4

1

40


Alternative: tying condition to remaining life

using % Physical Life Consumed

% of Physical

Life Consumed Condition

<10% 1

20% 2

30% 3

40% 4

50% 5

60% 6

70% 7

80% 8

90% 9

Failed 10

26

Enter: ―management strategy groups‖

Grouping of assets with similar renewal / behavioral patterns

Purpose - to assist: • Assigning asset lives and decay curves

• Calculating current replacement costs

• Calculating risk

• Consequence of failure

• Probability/likelihood of failure

• Developing life-cycle management plans

Examples • Gravity Pipes, RCP, Built < 1950, in High H2S areas

• Submersible sewage pumps, ABC Co., 123 series, 1983 - 1995



Key points from this session

Key Points:

Determining remaining useful life is

as much art at this point as science

Although good information is better,

asset ―decay curves‖ need not be

highly detailed to be useful.

Good CMMS data is key to building

agency specific failure curves

Good condition information is vital to

assigning remaining useful life

Incorporating good failure codes into

the work order is important to

building good failure curves

Associated Techniques:

Remaining useful life assessment·

Decay curves, useful-life tables

Survivor curves

Major failure modes

What is its remaining life?


Tom’s spreadsheet

../../../USEPA Workshops Core Materials/Base Exercise/EPA Seminar Master.xls

Fundamentals of Asset Management - US EPA · What is the importance of remaining useful life? ......

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